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Further Signs Of Easing In Still Tight Labour Market

MNI (London)

The March/April UK labour market report pointed to softening conditions.

  • April RTI payrolls surprised to the downside, falling by -136k (vs +25k expected, +42k previously). The ONS noted: "The number of people on employers’ payrolls fell in April for the first time in over two years, though this is an early estimate that could be revised later."
  • March employment rose to 75.9% on the quarter, up 0.2%, driven by part-time and self employed. The slide in RTI April payrolls combined with the March employment uptick suggests an April deceleration for employment.
  • A record high outflow out of economic inactivity (-0.4pp in the three months to March) was driven by 16-24 year olds (re)joining the labour force.
  • Meanwhile, vacancies in the quarter to April fell for a 10th consecutive month to a the lowest since Jun-Aug 2021. Anecdotal evidence flagged economic factors leading firms to hold back on recruitment.
  • The unemployment rate ticked up by 0.1pp to 3.9%, driven by long term over 12m unemployed.
  • Total pay growth held pace at +5.8% 3m/yoy in March, whilst regular pay edged up 0.1pp to +6.7% 3m/yoy (0.1pp softer than consensus estimates). With modest growth in nominal wages again seen, Bank of England policymakers will see the data as further evidence that the labour market is cooling, but perhaps at a slower pace than they would like.

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